In 1942, President Franklin D. Roosevelt’s National War Labor Board froze prices, salaries and wages as a means to stabilize the economy as America’s World War II effort hit its stride.
Employers, unable to compete for the best people, found themselves faced with a shortage of workers. As means to work around the freeze, employers began to offer health insurance to workers as a competitive perk. Thus proliferating the – now standard – employer-provided health insurance model.
Like anything where the consumer does not directly realize the costs of a product, the healthcare market slowly drifted away from the laws of supply and demand. The country would spend the next 70 years trying to conceive of a means to create a more affordable and workable system.
The biggest of the so-called fixes is what everyone has come to know as ObamaCare, which President Barack Obama signed into law in 2010. Just a few years later, however, the president’s signature law, and most recent healthcare overhaul looks to be headed toward demise.
Regardless of whether ObamaCare is a success or failure, Alabamians will be in a tough spot. The health insurance market is dominated by one provider, Blue Cross Blue Shield that controls an estimated 93 percent of privately insured patients in the state.
Since ObamaCare took effect last October, news outlets have reported horror story after horror story.
Many of the problems have been used as political fodder to blame the Obama administration for going back on the president’s promises of affordability and his claim that “if you like your health plan, you can keep it.” And while politics are often at play, Americans have heard cases in which some family premiums skyrocketed over 300 percent, and millions have been dropped from their coverage altogether.
It has been conventional wisdom that politically ObamaCare will be a winner for Republicans and will mark the beginning of Obama’s lame-duck status this year. Let’s assume the Republican Party takes both chambers of Congress and then the White House in the coming years — then what?
Going back to the pre-ObamaCare health care system in America will be Humpty Dumpty’s great fall because even if the law is completely repealed, all the king’s horses and all the king’s men won’t be putting it back together again. There have been a few ideas from Republican circles, the most prominent has been to increase competition by allowing health insurance policies to be sold across state lines just as auto insurance policies are.
At its core, however, that won’t do anything to solve the structural problems with the healthcare system.
Way before ObamaCare and even now as ObamaCare is in effect, hospitals over-bill in many circumstances. Last March, Time magazine showed how for-profit hospitals game the system by using what is called a “chargemaster,” $1.50 for an aspirin, $77 for four rolls of gauze. The idea is that by charging highly inflated prices at several times the actual costs to the hospital, those prices will be the starting point for negotiations with hospital patients and health insurance providers.
In a free-market system, hospitals likely could not succeed with those practices. And regardless of what ObamaCare advocates claim, it wasn’t a free market prior to the passage of ObamaCare, which is what has been blamed for the exorbitant costs of health care in the United States.
So what’s the fix?
As long as the American healthcare system is in this state of limbo somewhere between completely private and completely public, the public isn’t going to get the best of both worlds, but the worst of both worlds.
So what is to be done?
One path — championed by the ideological left — would be much like the British model: a single-payer system run by the government and absent of health insurance providers. Anyone familiar with the United Kingdom’s National Health Service knows, however, that it is mediocre and not on the cutting edge of medical innovation.
The other path would involve some sort of deregulation of the health insurance industry. That would involve going back to the pre-ObamaCare status, but finding a way to make it tougher to game the system against the consumer. Such an option is easier said than done.
Indeed it is no accident that in the state of Alabama BCBS is the one dominant health insurance provider. If the state government is so eager to lure in auto manufacturers, the aerospace industry and steelmakers — why aren’t lawmakers at least as equally as interested in luring other providers?
According to The Wall Street Journal, Alabama is a mixed bag as far as healthcare goes. It has some of the lowest hospital care costs in the nation (6th lowest out of 50). But it’s among the highest for prescription drug costs (6th highest out of 50). Add to that high obesity rate (4th out of 50) and a high number of smokers (9th out of 50 according to a Gallup poll), there are a lot of other reasons for Alabama’s high insurance costs.
Making healthcare accessible to all Americans is an honorable goal, but it’s not a portable commodity that can redistributed at a whim. The country is going to have some tough choices to make.
But one thing is for certain: ObamaCare won’t be the solution.